Finding Text
Finding 2022-001 Federal Agency: U.S. Department of Education Federal Program: Charter School Program Subgrant Assistance Listing Number: 84.282 Award Period: 03/13/2020 - 09/30/2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Procurement and Suspension and Debarment Criteria: The School?s procedures for processing expenditures should include controls to ensure that vendors paid with federal funds are not suspended or debarred from doing business with the federal government. Suspension and debarment Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the School contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the vendor is not suspended or debarred. The School can verify a vendor?s status by obtaining written certification from the vendors, or it can insert a clause into the contract stating the vendor is not suspended or debarred. Alternatively, the School check the U.S. General Services Administration?s Excluded Parties List System (EPLS). The School must meet one of these requirements before awarding the contract or making purchases. They are required to keep documentation demonstrating compliance with this federal requirement. Condition: The School did not have effective internal controls for ensuring it complied with federal procurement requirements and its own policy for verifying the suspension and debarment status of vendors for purchases exceeding $25,000. The School did business with two vendors without verifying they were not suspended or debarred. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining purchases from vendors over $25,000 from the year under audit. Cause: Management and contracted accounting staff were not aware of the School?s policy to verify vendors are not suspended or debarred from doing business with the federal government before entering into purchase agreements. Effect: The School did not obtain written certifications or check the EPLS to verify that vendors were not suspended or debarred before contracting or purchasing. The School paid these contractors $87,256 during fiscal year 2022. Without following its written internal controls, the School cannot ensure that vendors paid with federal funds are eligible to participate in federal programs. Any program funds the School used to pay vendors that were found to be suspended or debarred would be unallowable, and the federal grant could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School strengthen internal controls to ensure that all vendors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred.